Daily Variety reports that the Securities and Exchange Commission (SEC) is looking into evidence that Pixar may have used bogus dates for stock options issued to principles John Lasseter and Ed Catmull. A number of companies have come under the microscope recently for the practice known as options backdating, which can result in execs receiving artificially high profits from a stock sale. Though sometimes legal, the move can lead to heavy fines and even jail time if it is proven that investors were deceived.
Pixar filings reportedly show Catmull and Lasseter received one million and two million options respectively on Dec. 6, 2006, when the stock price was at a low for the period. The stock then went up more than 20% a couple weeks later, and was up approximately 50% by the end of January, possibly yielding a windfall of as much as $12 million for Lasseter and $6 million for Catmull. Also under suspicion are stock options issued to Lasseter in 1997, just before Pixar inked its first deal with Disney.
The SEC hasn’t launched a formal investigation into Pixar and may not pursue the matter since options backdating is difficult to prove, according to Wall Street insiders. That fact that options were granted prior to a price spike may, after all, be mere coincidence.
Often refered to as Pixar’s creative heart and soul, Lasseter directed the company’s first feature, Toy Story, and went on to helm Toy Story 2, A Bug’s Life and the recently released Cars, which is currently raking in big bucks at the box office. With Disney’s acquisition of Pixar, he is also heading up the Imagineering department, which designs theme park attractions.
Following its latest round of lay-offs, Dinsey recently posted a thrid-quarter net inclme of $1.13 billion, a 39% increase over the same period last year. Since profits from Pirates of the Caribbean: Dead Man’s Chest won’t be factored in until next quarter, the studio’s bully performance can be largely attributed to the strong box-office performance of Cars>. With the CG family flick coming out on DVD on Nov. 7 to add to the Pirates booty, the House of Mouse can look forward to stellar foruth quarter as well.